What is Max Fac, how is it different from Customs Union and what has Theresa May said about the EU partnership?

What is Max Fac that is being considered as a solution to the EU customs union and how do they differ?

By Jon Rogers

30th June 2018, 12:26 pm

Updated: 30th June 2018, 12:35 pm

AS Britain continues its Brexit negotiations and attempts to set up a deal with the EU once it has left the bloc one issue outstanding is the customs arrangements with one potential solution known as Max Fac.

The other option under consideration is a "customs partnership" but how do the two differ from the customs union?

What is Max Fac?

The idea is to employ new technologies and "trusted trader" schemes to remove the need for actual customs checks.

It would mean companies would only need to pay duties every few months rather than every time goods or services crossed the border.

Investigating this option are Business Secretary Greg Clark, Northern Ireland Secretary Karen Bradley and the Brexit Secretary David Davis.

Some businesses don't seem to be keen on this option as would probably mean higher costs, especially for the likes of car manufacturers who rely on just-in-time supply networks.

One business figures told the Financial Times though: “Max fac is at least based on procedures that already exist. We have a baseline to work from, even if we don’t know the practical steps the government needs to take to make it happen.”

How does that differ from a Customs Partnership?

In this proposal the UK would collect tariffs on behalf of the EU but without the need for new border checks.
This would mean Britain acting on behalf of the EU when handling goods from elsewhere, such as imposing EU tariffs, then passing the money on to Brussels.

The proposal would mean the UK has a frictionless border with the EU, which would help solve the headache of the Irish border question but still able to do a trade deal with non-EU countries.

But as one business figure said to the FT: “It involves having two tariffs, it involves tracking goods constantly, it involves importers paying a higher tariff rate today in order to get a rebate tomorrow.

The customs partnership is thought to be the prime minister's preferred option but Foreign Secretary Boris Johnson has described it as "crazy" and said it would create "a whole new web of bureaucracy".

Customs Union

Pro-Brexit supporters want Britain to leave the customs union when it leave the European Union.

This would allow the UK to strike its own trade deals with countries outside of the bloc, with supporters looking at possible deals.

THE IRISH BREXSTOP

Nat sinking feeling

Brexiteers say May is not honouring the referendum and threatening that three ministers could walk out of the cabinet and possibly the all-powerful 1922 Committee could move against her with a backbench rebellion.

In her Mansion House speech in March where she set out her vision for the future EU partnership, she said Brexit would require all sides facing up to hard facts.

She said: "As we leave the European Union, we will forge a bold new positive role for ourselves in the world, and we will make Britain a country that works not for a privileged few, but for every one of us.

"That pledge, to the people of our United Kingdom is what guides me in our negotiations with the EU."

Gove vs May - the latest customs row

Tensions between Gove and May erupted in late June 2018 as the Environment Secretary showed his disdain for May's attempt at compromise.

In a high level meeting he tore a document on the proposed customs plan in two.

The dramatic move came ahead of a showdown meeting at Chequers, scheduled for early July where Britain’s demands for a future EU relationship will finally be thrashed out.

Downing Street is desperate to make new offers to the EU in a bid to restart stalled Brexit talks.

Under the PM’s concession plans, Britain will stay aligned to all EU single market rules on goods, but not services.

No10 also want to offer Brussels a form of free movement for European workers.

It has emerged that Cabinet ministers have been warned they cannot leave Chequers without a final agreement - even if it means going without sleep.